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EU Blockchain Observatory and Forum
News article4 December 20194 min read

New structures: Blockchain in financial services

New structures: Blockchain in financial services

We recently published the detailed minutes of the meeting on 11 September in Paris. In this blog post, we provide a shortened overview of the event. 

It’s no secret that banks today face increasing costs and decreasing revenues thanks to a number of factors including more costly regulation, more volatile and risky markets and highly complex products, coupled with the fact that many banks are built on technology stacks dating to the 1970s and 1980s. 

While meaningful change is needed, this cannot be achieved with marginal upgrades. What is needed is structural change of the kind that blockchain, at least potentially, could provide. At our workshop in Paris on 11 September, we brought together representatives of banks, regulators, central banks, fintech companies and businesses to Paris to discuss just what such change could look like.

Below is a short overview of the highlights of the discussion. 

A vision of the future of financial services thanks to blockchain

The day began with a high-level overview of how blockchain might transform financial services. 

It was pointed out that successful blockchain consortia in the financial space tend to use the technology to digitise processes that could not be digitised with the simple Internet – for example, trusted document exchange. This is an indication of how blockchain could in future automate and to an extent replace the role of certain intermediaries, and do so in a more cost effective and safe way than is possible now. 

Regulation was also touched on. It was pointed out that a lot that can be done in the blockchain space with existing regulation, but that banks and clients often don’t have enough information about what is possible. Regulators need to do a better job of educating the public on the current state of regulation and as well as regulatory change. This in turn could help catalyse more projects to test and pilot the new processes, products and services that the financial industry needs. 

Public vs. private network: which blockchain for your financial services infrastructure

The workshop then took a deep dive, in the form of a “talk battle” or group debate, into the relative merits of public versus private blockchains for financial services.

The “pro public blockchain” side pointed out that the Internet is built on decentralised systems that not only work well, but have also proven themselves highly adaptable. We should therefore focus on making blockchain into a common good like the Internet, keeping it as public as possible. 

The “pro private blockchain” side responded that, for their part, banks do not care about decentralisation; they care about performance, privacy, simplicity, ease of implementation, reduction of cost, and security. Blockchain can solve for complexity and inefficiency only if it is simple and performant itself. Private blockchains have the clear edge here, and can be particularly effective in single organisations or groups where people already trust each other. Even in such “closed” situations blockchain can be a superior alternative to a centralised database as there is plenty of fruitful middle ground on the decentralisation curve, and it is possible to profit from a degree of decentralisation and disintermediation as opposed to complete decentralisation.

What’s the best way to regulate decentralized finance?

When looking at the best way to regulate decentralised finance, it was pointed out that good regulation is technology neutral. There generally is no reason to create specific regulation for a technology. That said, regulators should take into account technological evolution, and react – in a technology neutral way – to new market developments that clearly do not fall under existing rules, as France has done with cryptocurrencies.

Speakers also came out in favor of EU-wide guidance on blockchain regulation, to avoid having 28 different national regulations as is the case today in crowdfunding. The representatives of the European Commission said they were working with the national authorities on these issue, but they were complex. One problem is that we are at an early stage. Are market obstacles really about regulation? Should we change things now, or should we wait because sometimes things solve themselves or at least become clearer? Sometimes it is not so clear.

Decentralizing payments: the future of stable coins

The day ended with a look at stable coins.

The value of stable coins is in addressing the market volatility of cryptocurrencies and other natively digital, blockchain-based assets. One way is to do so through central bank digital currencies. Another is through private stable coins like Libra. The ECB said it understood that were a lot of worries about Libra, but from its perspective it could reassure people: the Swiss regulator had clearly stated that Libra is a payment system and subject to the applicable regulation, so there are mechanisms to deal with it.

It was also pointed out that stable coins need not be only about carrying out existing processes faster and more cheaply. They could also catalyse fundamental innovation in how money works. Stable coins can meet market needs as well. Retailers see how the younger generation is diversifying their money in the digital sphere. They may very well demand digital currency options, and retailers need to be prepared for that. Here too, stable coins could be very useful.

Workshop details

A detailed report on this workshop, including links to the presentations and the video of the day, has been published on our Reports page. 

  • The Workshop took place in Paris on 11 September, 2019
  • There were 67 people registered for the event 
  • Speakers and panelists included:
    • Jennifer D’Hoir (Gide)
    • Jean-Marc Stenger (Forge)
    • Ken Timsit (ConsenSys)
    • Ciarán McGonagle (ISDA)
    • Daniel Ivanier (Fragmos Chain)
    • Manuel Valente (Coinhouse)
    • Ludovic Courcelars (ConsenSys, Moderator)
    • Emmanuel de Fournoux (AMAFI)
    • Domitille Dessertine (AMF)
    • Faustine Fleuret (ConsenSys, Moderator)
    • Andrea Pinna (European Central Bank)
    • Jón Helgi Egilsson (Monerium)
    • Hubert de Vauplane (Kramer Levin)
    • Martin Calmels (Groupe Casino)
    • Jekaterina Govina (Central Bank of Lithuania)
    • Reto Gadient (Moderator)


Publication date
4 December 2019